Quality motor finance partners are becoming increasingly important in the current economic climate. Customers are finding it harder to get money, you’re finding it harder to get money on their behalf and cash is, generally, in short supply.
Well, that’s how it may seem. However, if you have an experienced partner working alongside you, chances are you’ll still be able to get finance for your customers.
Experienced operators who can do this are going to find themselves increasingly advantaged in being able to make sales others can’t. This is where specialist motor finance houses such as Jigsaw Finance come in. Top dealer groups and franchised retailers normally have several finance partnerships. There’s the manufacturer’s scheme, which will be the first port of call for new car deals, and a fair proportion of used ones, too.
Then, there’s the dealer’s other key independent motor finance relationships such as Santander Consumer or Black Horse who will probably provide used car stocking facilities as well. These are core relationships.
But as Jigsaw’s Kurt Bradbury explained, dealers should also consider using a specialist motor finance brokerage to add an extra string to their bow. Jigsaw is one of the key players. So what’s the appeal? Simple. ‘We can provide solutions that the others can’t,’ says Bradbury.
‘We’re not looking to substitute the manufacturer’s finance, nor the dealer’s favoured independent motor finance house. The fact is that even with these arrangements in place, it’s impossible for a dealer to deal with every finance company and consequently place every deal.
‘There are more than 20 finance companies out there and, increasingly, dealers are finding customers who don’t meet the criteria of their main providers or situations where the products they do have don’t meet their customers’ needs.’
It is this aspect that is key. Customers who would previously have been absolutely fine for finance are now finding they’ve being refused – simply because lenders have tightened up their underwriting criteria or their product range. In many cases the customer’s situation hasn’t changed at all: they remain in employment and still have the same credit score. But the goalposts they’re aiming for have shifted.
‘We’re not there to substitute existing arrangements, but to provide incremental opportunities,’ explains Bradbury. ‘If you can’t satisfy a particular customer’s requirements, with your core finance products, Jigsaw has a solution. To dealers this means another vehicle sale. I can bring more than 20 extra avenues to the dealers’ existing panel.’
Many of these specialist lenders are actually closed to dealers, anyway. Only organisations such as Jigsaw can gain access to their products, and the extra range they provide.
The catalogue of products Jigsaw offers is extensive. Bradbury has one offer he’s particularly proud of – PCP. Most manufacturers have their own PCPs, and many independents’ products are weak, inflexible or non-existent. What’s more, many manufacturers don’t offer PCPs on cars older than six months! Jigsaw can do them up to four years old – and, instead of the regular three-year period, can offer five-year packages. ‘This is a real strong point,’ adds Bradbury.
It all combines to substantially reduce customer’s monthly payments. As household budgets tighten, this could generate considerable sales. ‘Monthly payments on PCPs can be up to 40 per cent cheaper than HP schemes – or, the dealer can place customers into a newer, higher spec, more expensive car for the same monthly payment. It’s a very potent proposition,’ explains Bradbury.
Providers such as Jigsaw have a further advantage, too – buying power. ‘A dealer may themselves be able to source these products directly; even a PCP scheme, but they can only give the provider a few deals a month. We can, cumulatively, offer these lenders hundreds of deals a month. Such huge volume at low acquisition cost means we’re able to get lower rates, increasing dealer profits and making it more attractive to customers, too.’
Bradbury shows an example of this buying power by revealing that Jigsaw’s penetration of residual value (RV) products such as PCP and lease purchase is more than 50 per cent. ‘Many finance companies would kill for 50 per cent penetration on these products.’
Additionally, Jigsaw is one of the few that can make such products work for all parties, too.
We’re all familiar with some real RV shocks this year. ‘Consequently, some lenders shy away due to the guaranteed future value risk,’ said Bradbury. ‘But for us, the values
are not up in the air. Not only do we have the systems to get these products to market, we’ve also got the experience to ensure this works: our guys do it for a living.’
Surely this makes behind-the-scenes operations pretty complicated? ‘Certainly, but that’s our business to sort,’ he says. ‘What keeps us busy is getting the product in front of the dealer, ensuring they don’t have any of the complexity.’
Ample training is provided to further reduce this. Induction training is conducted on site for dealers, followed up by one-on-one desktop training by local account managers.
‘No matter how good your product, it’s worthless if the dealer doesn’t understand it,’ explains Bradbury.
In practice, this training covers all bases. ‘We’ll show dealers how to prepare applications, so that the process runs smoothly. This ensures there are no snags at the payout stage. Investment such as this in the front end quickly pays off.’
Jigsaw has an automated point of sale system, which trained-up dealers can use to provide quotes. That’s for all products, in the showroom, right away. Documents are available online to print out, so the whole process can be set in motion in no time at all.
‘If you can’t get your product out there and in front of customers and dealers, it’s all futile,’ says Bradbury. ‘Talk is cheap. We have the evidence that we do as we promise.’
This is in return for the dealer’s exclusive commitment. Why is this crucial? ‘It takes sales pressures out of the equation. By offering this commitment, we’ll reciprocate, with full support from our guys on the ground who can concentrate on managing the business, rather than selling it to the dealer.’
This commitment to Jigsaw doesn’t come at the expense of any manufacturer and level two financiers, though. Bradbury’s Jigsaw team simply takes up all the extra business that the core lenders don’t want or can’t do – and this extra buying power for them has various advantages. Not least in being able to secure lower finance rates.
‘Sometimes, dealers have informal relationships with local brokers. They’ll offer nibs of business to them here and there. With us, we tidy up all those nibbles into one meaningful chunk.’
And not one word about sub-prime. That’s because such finance providers are becoming more and more important for all types of lending. Banks will always err towards spotless credit histories, but there are problems creeping in for more and more people – who even now are far from being labelled as sub-prime.
Banks are currently operating tight lending criteria, some tighter than others. ‘Dealers should see us as their central funding house,’ says Bradbury.
‘In an ideal world, they’d have personnel dedicated to looking at every deal, knowing exactly who to place it with and how to get the best possible package. In reality, dealers don’t have the time, nor will lenders show the interest because of the low level of the business.
‘Finance houses such as us are, effectively, a dealer’s central funding house. We’re an extension of the business. By augmenting a dealer’s existing arrangements, we offer the ability to increase sales and make deals happen that otherwise wouldn’t.’
And with some considerable success, too. Jigsaw has been operating since 2000, and growth has largely been through word of mouth. ‘The reasons why are simple – we do as we promise,’ adds Bradbury. Maybe, it’s time you found out what Jigsaw can do for you…